The US stock market is open for about 252 days in a year. About 54% of the days (137 days) are positive for the S&P 500 and 46% of the days (113 days) are negative for the S&P 500. In a Bull Market, 54% of the days in a year are positive for the S&P 500. In a Bear Market, 51% of the days in a year are positive for the S&P 500. Further, the positive and negative days are intermixed during the year. So just because you have a positive week or two does not mean that you are in an "uptrend". Upward or downward trends are only known in hindsight. For e.g., if you net out positive after a month, you can conclude that the past month was "up". But that says nothing about what could happen the next month.
This means that if after a couple of positive weeks in the S&P 500, you feel good about the stock market, there is roughly only a 50/50 chance that the next couple of weeks will also be good. If anything, if you get a streak of positive months, the chances of the upcoming months being bad is much higher than 50%, because of reversion to the mean. Hence, if the first 6 months of the year have had greater than 50% of the days being positive, than the next six months will likely have a much less than 50% of the days being positive such that for the full year you get to that average of only 54% of the days in the year being positive.
But the picture gets worse. The one-day gains on each of those positive 137 days during the year are not the same. Typically, within those 137 positive days for the market, there are 10 days that have percentage one-day gains that are at least two standard deviations higher than the remaining 127 positive days. This means that if you are not in the market for those 10 Golden positive days, you may end up net negative for the year or barely positive: https://www.fool.com/investing/2019/04/11/what-happens-when-you-miss-the-best-days-in-the-st.aspx
There is NO WAY of predicting when those 10 Golden positive days will happen in a year for your portfolio. These 10 Golden positive days are usually not consecutive: but happen at different times of the year. Hence, the wise old adage that you cannot "time the market". And in most years, with the exception of those 10 Golden days; your portfolio action is mediocre and mixed for the remaining 242 trading days of the year. This is why you cannot let a couple of bad weeks or couple of good weeks change your equity portfolio strategy. And hopping in and out means you'll most likely miss those 10 Golden Days - and destroy your portfolio's returns for the year.
If all of the above is counter to your investing experience over the past 3 years, that is because the Federal Reserve and to some extent the Government have been taking actions that have distorted the stock market ("the Fed Put"). Those days are now gone.
A call out to Cresmont Research for crunching the data supporting this blog: Stock-Yo-Yo.pdf (crestmontresearch.com)
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